[Music] hi Shannon Waller here and welcome to inside strategic coach with Dan Sullivan Dan it's great to see you again you said something in a 10x connection call that just had everyone kind of riveted and created a bunch of breakthroughs that I thought would be super fun to talk about in today's podcast episode and that is that all of your pricing lies in the aspirational future of your clients and that is not how most people think about price pring and given that pricing is one of those somewhat angst filled questions for a lot of entrepreneurs and their companies in terms of their products and services and experiences let's dive into pricing let's talk about your different take on pricing yeah well we've just released a book on capitalism and I've broken capitalism down as a five-part method that has been around forever so it's not recent human history this has always been at work as I think probably as soon as humans were humans pricing came into their activity and that is what is your time worth what is your skill Worth to somebody else okay but when marketplaces got created and products and services were sold then it became really crucial if you were going to be successful in the capitalist Venture and the five part process is five PS so the first is pricing and then the next one is property that your achievement as an entrepreneur uh focus on entrepreneur because it's our main and only business is entrepreneurs is that how you create value is actually a form of property it can be structured it can have a process to it and everything in today's world you can actually get patents on the way that you go about creating your value so it's property and the third one is productivity getting things done faster easier cheaper producing a bigger result fourth one is profitability you keep more of what you take in and number five is prosperity which means that how your business success affects everything around you but everyone around you that they share in your success so pricing property productivity profitability and prosperity but the real hurdle for people who are thinking about becoming entrepreneurs is actually the first one pricing because most people live their lives where somebody else does their pricing for them okay and what I mean by that is most other people work for someone else and they're offered a certain price a certain salary and that's already predetermined before you go in and you're in competition generally with other people so you have to say you know if I turn down the offer then it's going to go to someone else so there's a tendency on most people not to get into any kind of negotiation regarding that and throughout their career they don't want to think about raises and anything like that because they don't like the activity of actually having to negotiate what their value is to someone else who in this case is writing the check okay you can tell I was born a long time ago that I still use the word check I'm not sure people get checks anymore but paycheck is still in the vernacular you're okay with that paycheck is still it might be a pay stub but it still represents a paycheck yeah the a pay electron you know it goes into your bank account but anyway pricing for entrepreneurs is where you decide that you can be independent in the marketplace independent of employment you won't be employed but nevertheless you have to be paid then the question is how are you going to price your time and how are you going to price your talent right and it's the combination of time and talent that determines what needs to be negotiated okay so that's really the central issue here is pricing and the goal that I want all the entrepreneurs and strategic coach to have is that they're not competitive pricing okay so they're not pricing themselves because they're in competition with many many other people offering more or less the same deal to a buyer okay as a matter of fact what we want to do is we want to turn around the relationship of who the buyer is and who the seller is the great speaker that I saw at genius Network a couple months ago Peter warl is a m&a expert merger and acquisition expert and he takes the part of the person selling something a company in this case a company and he's got two strategies that are very very powerful the first one is that if you're the seller then the strategy is to actually become the buyer which means that you're entertaining competitive bids on the part of other people and the second thing is to recognize that all pricing is psychological there's no right price for anything okay all pricing in the marketplace gets negotiated it gets negotiated and then we add a third element to that in strategic coach where we say that actually you're not pricing it against competitors in the marketplace you're pricing in relationship to how big the future is of the person that you're talking to Okay because in their mind if they don't have a big future then you're price is a cost right okay if they have a really big future and what you're offering is really crucial then your price is an investment it's not a cost so this is why I have a preference for really ambitious successful talented entrepreneurs who are hearing about us and approaching us and engaging with us because they've heard that the fastest way to your biggest future is really by being in strategic coach this is so powerful Dan now how easy or hard is it for people to shift from that much more competitive mindset into this you know I need to be making sure that I'm talking to people with really big futures so that they see they're working with me as an investment as opposed to a cost and pricing it accordingly you've coached thousands and thousands of entrepreneurs it makes me think of four seas there's commitment and courage involved in doing this how tough is it to make that shift well I think it's the toughest obstacle one to become an entrepreneur in the first place but I think it's the toughest obstacle to actually being a successful entrepreneur where you feel very proud and confident about the way that you've priced your value in the marketplace interesting one of the things that you talked about before we started recording was that people often have outmoded models for how they're pricing themselves do they get kind of Trapped sometimes in their past yeah yeah and it's a topic that a lot of people just don't like talking about they don't like negotiating and it's because they don't really have a proper appreciation of their own value first of all don't negotiate with in any situation where what you're offering is not unique right good rule Okay so we've really attracted going back 30 years or more really top-notch entrepreneurs but I think the reason why we've attracted them is that we're offering something unique in their experience a structure that supports their biggest Ambitions well off the bat that would not be true for most so-called coaching companies they wouldn't be supporting they' be from our experience and we know a bit about this because we do a lot of comparison between our intellectual property and what else is out in the marketplace and there aren't that many coaches in the world I think in the entrepreneurial Universe I don't think there's that many coaches who actually create very very unique Thinking Tools we have these marvelously powerful Thinking Tools that have been our regular offering I was just looking at that this is the 134th quarter that I'm coaching a strategic coach Workshop so this started in 1989 so we're halfway through our 34th year and and every quarter for 134 quarters we've created new Thinking Tools true at least one and in some cases two or three every quarter over those 33 plus years so part of it is that those tools come from engaging with really successful entrepreneurs biggest Futures our whole approach the only research we do we're not looking at General Trends in the marketplace we're just looking at the very special Trend that consists of a particular entrepreneurs biggest Ambitions for themselves both as a entrepreneur but also as um all around person you know what they're trying to achieve in their whole life and that's where we're drawing all of our information to create our new tools and therefore we're in a realm of our own we simply have no competition well pricing is a lot easier if you have no competitors true words Dan true words yeah that's a great Point how do you make pricing easy just don't have competitors that'll make your pricing really easy well and to that point that means that there almost needs to be a hyperfocus on unique ability on understanding really what your Marketplace your very individual audience requires being very tuned in is what we talk about their vision for their future their dangers their opportunities and their strengths and really honing your value creation based on your and your company's unique ability to create value that way then you can have to bring back a term they Grant you a value creation Monopoly yeah which is very powerful yeah and that's what you are striving for that in terms of your relationship with them I keep track of this but we now have more than 40 entrepreneurs in strategic coach who have seen us every quarter for more than 30 years so what they've granted us is a value creation Monopoly in a crucial part of their life you know just the growth of their entrepreneurial business and I really pay attention I mean I don't pay attention to everything but I really pay attention to what they're saying about new things that they're encountering that they don't quite know how to Think Through yes okay and that's the raw material of our uniqueness in the marketplace is that I'm paying attention to dangers that they don't know how to think about opportunities that they don't know how to capture and strengths that they have that they're not utilizing in a way that they feel they should be and then I think about it and we as the designers of the program what we're thinking about is okay so what's a thinking tool we can create so that they can actually engage with their future so you really pay attention to those people that have granted you already that value creation Monopoly and just stay very very tuned to what their challenges are what their experiences are and then use your ability to help create phenomenal Thinking Tools to help address that need right yeah and then that Cascades down to the rest of the program as well yeah and I think we're unique in the world and we're going through a process of turning our major tools into actual patents we've got a very extraordinary IP Law Firm one of our lead clients in the Free Zone Program Keegan Caldwell and his partner Katie Marino and they say that their analysis is that at the level that we're coaching and who we're coaching with we have zero competition in the world as far as the conent creation of new Thinking Tools as there's nobody else out there there's no one else who is showing up in the form of copyrights and trademarks and patents in the whole world besides a strategic coach yeah and that's evidence of the fact that we have a monopoly in terms of being seen as valuable to talented successful entrepreneurs who now have much bigger Ambitions and want a particular support structure a systematic support structure that allows them to grow and grow and grow and enjoy the journey yes because before they meet coach sometimes it's not enjoyable just going back to the whole process with Keegan one of the things that has been really interesting throughout the conversations because I've been a part of some of them is just how little original thought is actually out there and this is not the first person we've heard that from that so many other ideas or derivatives often from Dan people take the ideas hopefully not illegally you know but there's a lot of derivative thinking but not a lot of thinking and I think that a part of that is because as you said ear we're not looking sideways we're not looking to see who else is running the race with us we're running our own and there's something to be said for that and that's kind of what I mean by leaning into uniqueness you're not distracted by what someone who is in the quote unquote Lane beside you and you've really focusing on your uniqueness and you coach our clients a lot to take their uniqueness seriously yeah I mean what we've achieved for ourselves we want clients to achieve that in their own realm you know this having value creation monopolies in the marketplace because then they can dispense with the cost and time and money of competing with other people's offerings yeah and that is just totally differentiate yourself from anyone else who's doing anything just zero in and the biggest problem here isn't so much the pricing the biggest problem is that people are not thinking in terms of the checkwriter okay so say more about that they're not focused enough on the check writer well first of all it's going to be about them or it's going to be about you and I would say most entrepreneurs it's about them the entrepreneur is that they're thinking in terms of how they're better than their competition you know and from my standpoint they spend a disproportionate amount of time worrying about people who aren't writing them checks right people who are taking checks away from them okay and I said well I don't want to spend my time doing that I just want to spend my time finding out what's the unique thing that people will write almost any size check for that's very interesting that people will I'm writing this down well write almost any size check for yeah well depending on the size of their ambitions yeah so J someone's going to put this into practical action after listening to this conversation especially if they're feeling a little bit trapped or stuck in older models or older thinking of their pricing and please share your pricing formula which is amazing so what would be your coaching to someone goes oh my gosh I haven't thought about this I'm uncomfortable negotiating I have been paying attention to my competitors I could focus more on my clientele the size of their futures or maybe the people that working with their Futures are too small what coaching would you give in this instance yeah well I think the first one is not so much what you offer but who are four or five existing or potential future checkwriters that you can just have a conversation with where you ask them the question you know and we have a very powerful question if at some point in the future and let name it let's say it's 3 years out and we're having the discussion about what's happened and you're looking back over the 3 years from today what has to happen for you to feel happy with your progress both professionally and personally okay and that's the ease with which you can ask that question is really the key to your pricing because you're not making it about you you're making it about them but you're creating a framework for them that they've never experienced with anyone else in their life no one has asked them this question because you're taking them into the future and you're also taking yourself into the future with them because the question is three years from now we're having the discussion okay if they accept that they just bought the relationship okay and then we're coming back to the present and then what has to happen both professionally and personally for you to feel happy with your progress I'm not asking them what the progress is I'm asking them what progress will make them happy which is a totally different thing so I'm selling a relationship I'm selling the future and I'm selling happiness I mean those are differentiating qualities they sure are said anything about what it is that I do or what I can do but they're giving a full experience of what it's like to actually work with me right yeah so I'm giving them the experience of what it's going to be like if you have a relationship with me going into the future because it's about that person not about you it's not about me okay so the way I make it not about me is simply by being me I love it because I love talking to people about their Futures yeah cool and will you please share the Dan Sullivan formula for pricing which has always been a fun one yeah and at a certain point you kind of are marinating them with their own future here and you know what it's going to be like and you can ask them very specific questions well how would you measure that progress you know what are three or four key measurements of what progress you would be happy with over the next 3 years and you make it very specific today's date three years down the road so their brain really zeros in on the specific nature of their future and they haven't thought this through themselves you know and they don't have anyone else that they can talk with in their life about this type of you know very personal you know it's very personal ambition is a very personal thing but here it's an easy conversation and the thing I'm trying to sell them on here is their own future you I'm just trying to get them engaged with a future measured three years down the road that's a lot bigger than what they're achieving right now and then it comes back and you know there's a conversation about how the process works of helping and in our case you come to our program in the old days for first 15 years is that they were working directly with me oneon-one and I had a structure and I had a process then they said well how much is that going to be and I had the experience that if I had Nam them a price that was twice they would have gone for it but I was too cautious right you know and I was too reluctant to put it out there so I came up with a pricing formula that the price I'm going to say to the person asking scares me and then you add 20% to whatever it is you know there's confidence that goes along with naming your price you know it's hard the first time you do it but if you get away with it two or three times in a row then you become confident about it which simply shows that it's all psychological okay it's worth to them what the value is to their future right Dan is having that the sole reference point is incredibly powerful yeah yeah because it's either a cost and it isn't because the number that you've mentioned is too much is that their future isn't big enough for them to see it as an investment they're still seeing the amount of money as a cost well now I become the buyer because I don't want to work with someone whose future is so small in their own mind that they would have a problem with my price so I'm sitting there and I say well I don't think I'm the person that you should work with I think you need someone whose skills are as modest as your goals what a lovely brush off that is you need someone who's you know a modest person oh my gosh I love it Dan this is such a great mindset what' you get out of this I mean oh I mean I think we've put together a lot of different pieces that have been said we have different ways at different times but this is very very much and you know I have to thank Peter warl because he's got this down and what he's discovered he's got a great book out called Enterprise Value and he's very very clear but what he does is that he gets his clients to have a really big ambition of what lies on the other side of their sale of the company they have many many assets that they're not even clear about but because he's been doing this for more than 40 years he's got a real sense of all the different aspects of a very successful business and that would in some cases double easily double the price that the person had in their mind about what their company was worth and then he puts it out to the world and he starts getting bids okay and he said in really successful sales the bids are sort of on a chart you know a little dot for each bid and then you have a pricing range and he says the goal is to get a ten or more bids on the sale and he said you could have as much as a 100% difference in the value some cases the highest bid is two and a half times the smallest bid and the person who is writing the biggest check feels really good about the sale and the other people just drop off but it has to do with the Ambitions of the buyer they have to see a future for themselves with this new company asset that they're going to buy that it fits into a much bigger future that they want you know but it's all psychological things are worth what people have plans for and I think that's the powerful mindset shift Dan is it's not an absolute out there to some extent it's not even objective it's based on the size of that person's future and whether or not they see that investment as being part of it and when we bring that to ourselves we're like oh am I unique am I focused on the future of my value creation Monopoly clients and have I updated my pricing recently you what's the price that scares you now and add 20% guarantee it's going to be different than it was 5 10 15 20 years ago which is sometimes the last time people have Revisited the pricing it's just so thought-provoking and so interesting I love the freedom that this conversation gives people yeah it might have been five years ago there was a baseball players contract that was signed it was Mike Trout from the Los Angeles Angels it was 13 years for 430 $ million okay which is you know it's more than 30 million a year and I remember going into one of my workshops and the topic of this contract that the player had signed came up and they said no baseball player is worth $430 million and I said well of course they are somebody just agreed to it okay and he says but yeah but I said well first of all the person who agreed to pay that much to this boat player is a billionaire so I got a feeling that they have some judgment about what constitutes a good deal or a bad deal that got them to a billion dollars in net worth but it's very very interesting that as big as the salaries are today baseball season just started as we are doing the interview here but the payroll of a baseball club is you know really that's in the stratosphere and yet there's a ratio of the total amount of money paid for the players compared with the market value of the baseball team and the ratio is exactly the same here in the 2020s as it was in the 1950s wow there's no difference in the ratio between amount of money paid for the players and the market value of the baseball team and they've got a ratio and they operate within their ratio uhhuh more zeros but same ratio yeah in 1950 100,000 would be fantastic M I think I remember the first player who got a $100,000 contract and it was probably in their early 1950 I think it was Stan museal of the St Louis Cardinals Hall of Fame great great player so Mike Trout you know after his first three seasons you knew he was going to be in the Hall of Fame he's just one of the greatest hitters in the last 25 or 30 years he draws in another 5 to 10,000 fans per game just because he's on the field and that's factored into his value uhuh also they're tying him up for 13 years see if he had a three-year contract then they're back negotiating again three years from now and the owner who bought it is just saying this person has gold for good you know he's going a great player forever and we're going to lock him up so both sides did it but it was entirely psychological yeah yeah he could have a serious injury and his career's over and he's got a lot of that money guaranteed well and the other thing is from the owner standpoint they never have to play against them right so that looks like a really good deal yeah these are psychological factors you know so the more that entrepreneurs could understand just to wrap up our conversation here is there's no right price for anything there's only the price that's appropriate for The Unique value that you're providing to someone's unique future that's the only consideration here brilliantly summed up Dan thank you so much thank you Shan